UPS (NYSE:UPS) released its second-quarter 2024 financial results, revealing a slight dip in consolidated revenues to $21.8 billion, a 1.1% decrease compared to the $22.1 billion reported in the same quarter last year. The company’s consolidated operating profit also saw a significant reduction, landing at $1.9 billion, a 30.1% decrease year-over-year, or 29.3% on an adjusted basis. Diluted earnings per share (EPS) stood at $1.65, while adjusted diluted EPS reached $1.79, marking a 29.5% decline from the $2.54 reported in the second quarter of 2023. These figures provide a snapshot into the current financial standing of UPS and invite a closer comparison against previous performance and future projections.
The second quarter results were impacted by a GAAP charge of $120 million after tax, or $0.14 per diluted share. This included a one-time payment of $94 million to resolve an international regulatory issue and $26 million in transformation and other charges.
Despite the year-over-year declines, UPS CEO Carol Tomé expressed optimism, stating, “I want to thank all UPSers for their hard work and efforts in the second quarter. This quarter was a significant turning point for our company as we returned to volume growth in the U.S., the first time in nine quarters. As expected, our operating profit declined in the first half of 2024 from what we reported last year. Going forward we expect to return to operating profit growth.” This statement highlights a crucial point for investors and analysts comparing UPS’s performance: while current profits are down, there are signs of recovery and anticipated future growth.
U.S. Domestic Segment: A Mixed Performance Compared to Last Year
Examining the U.S. Domestic segment provides a more granular comparison. Revenue for this segment totaled $14,119 million in Q2 2024, a 1.9% decrease from $14,396 million in Q2 2023. This revenue dip was primarily attributed to a 2.6% decrease in revenue per piece, influenced by shifts in product mix. Operating profit in the U.S. Domestic segment experienced a more substantial decrease, falling to $989 million from $1,602 million year-over-year. Adjusted operating profit was $997 million in Q2 2024 compared to $1,681 million in Q2 2023. Consequently, the operating margin for this segment was 7.0%, with an adjusted operating margin of 7.1%, both lower than the previous year.
However, Carol Tomé’s statement about returning to volume growth in the U.S. market is particularly relevant here. While revenue and profit metrics show a year-over-year decrease, the return to volume growth after nine quarters could signal a positive trend reversal for the U.S. Domestic segment in the latter half of 2024. When comparing NYSE:UPS stock, investors will be closely watching if this volume growth translates into improved financials in the coming quarters.
International Segment: Revenue and Volume Decline Compared to Q2 2023
The International segment also faced a year-over-year revenue decrease, reporting $4,370 million in Q2 2024 compared to $4,415 million in Q2 2023, a 1.0% decline. This decrease was largely driven by a 2.9% reduction in average daily volume. The operating profit for the International segment was $718 million, down from $883 million in the same quarter last year. Adjusted operating profit was $824 million in Q2 2024, compared to $902 million in Q2 2023. The operating margin stood at 16.4%, and the adjusted operating margin at 18.9%, both lower than the corresponding figures from the second quarter of 2023.
Comparing the International segment’s performance to the U.S. Domestic segment reveals different challenges. While the U.S. Domestic segment saw volume growth but revenue per piece decline, the International segment experienced a decrease in average daily volume, contributing to the revenue decrease. For investors looking at Nyse:ups Compare, understanding these segment-specific dynamics is crucial for assessing the overall health and future prospects of the company.
Supply Chain Solutions: A Positive Revenue Growth Compared to Previous Year
In contrast to the U.S. Domestic and International segments, Supply Chain Solutions demonstrated positive revenue growth. This segment reported revenues of $3,329 million in Q2 2024, a 2.6% increase compared to $3,244 million in Q2 2023. This growth was primarily fueled by expansion in logistics, particularly within the healthcare sector. Operating profit for Supply Chain Solutions was $237 million, slightly down from $295 million year-over-year. Adjusted operating profit was $243 million in Q2 2024 compared to $336 million in Q2 2023. The operating margin was 7.1%, with an adjusted operating margin of 7.3%.
When we compare the Supply Chain Solutions segment to the other two, its revenue growth stands out as a bright spot. However, like the other segments, it also experienced a decrease in operating profit and margin compared to the previous year. For those conducting a NYSE:UPS compare analysis, the growth in Supply Chain Solutions, especially in logistics and healthcare, could be seen as a potential area for future investment and expansion.
2024 Outlook: Updated Financial Guidance and Share Repurchase Program
Looking ahead, UPS updated its full-year 2024 financial targets. The company now anticipates consolidated revenue to be approximately $93.0 billion and consolidated adjusted operating margin to be approximately 9.4%. Capital expenditures are projected to be around $4.0 billion. Notably, UPS is restarting its share repurchase program, targeting $1 billion annually.
Comparing the updated 2024 outlook to previous guidance (if available) and market expectations is crucial for investors. The revenue target of $93.0 billion, while substantial, needs to be evaluated in the context of the slight revenue decrease in Q2 2024. The adjusted operating margin target of 9.4% also reflects the company’s efforts to improve profitability in the latter half of the year. The restart of the share repurchase program could be viewed positively by investors as it signals confidence in the company’s financial position and commitment to returning value to shareholders. For anyone performing a NYSE:UPS compare, these forward-looking statements are essential for assessing the stock’s investment potential.
Conclusion: Navigating a Turning Point – A Comparative Perspective on NYSE:UPS
UPS’s Q2 2024 earnings report presents a complex picture when compared to the previous year. While consolidated revenues, operating profit, and EPS have decreased, the company highlights a return to volume growth in the U.S. Domestic segment and positive revenue growth in Supply Chain Solutions. The updated full-year guidance and the restart of the share repurchase program suggest a forward-looking strategy focused on regaining profitability and enhancing shareholder value.
For investors and analysts engaging in a NYSE:UPS compare analysis, several key takeaways emerge:
- Year-over-year decline: Q2 2024 financial metrics are down compared to Q2 2023 across most segments.
- Segment Performance Divergence: Supply Chain Solutions showed revenue growth, contrasting with declines in U.S. Domestic and International segments.
- Volume Growth in U.S. Domestic: A potential turning point, indicating a possible future positive trend.
- Updated Guidance and Share Repurchase: Forward-looking indicators suggesting confidence and commitment to shareholder returns.
Ultimately, evaluating NYSE:UPS stock requires a nuanced understanding of these comparative factors. While the current earnings reflect challenges, the signs of volume recovery and strategic financial planning indicate a company navigating a turning point with an eye towards future growth. Investors should closely monitor UPS’s performance in the coming quarters to see if the anticipated return to operating profit growth materializes and how these trends compare to industry benchmarks and competitor performance.
